Australian and American tariffs policies: do they rock or tango?

Abstract

This paper disentangles between two hypotheses on the determinants of Australia's and the US' average tariffs levels. Relying on historical data that covers a century (1904 to 2005), it is first shown that a break in the series occurs in 1947, forcing to separate the data into two sub-periods (before and after the 1947 break). The results permit to distinguish a "rock" and a "tango" regime. The first designates the period where one country (the US) has a stronger influence on the other, while the second indicates that, after 1947, stronger reciprocal inter-relations have to be taken into account.

Kwiatkowski, Phillips, Schmidt, and Shin, 1992, “Testing the null hypothesis of stationarity against the alternative of a unit root: How sure are we that economic time series have a unit root?”, Journal of Econometrics, 54 (1-3), 159-178